Bitcoin Drops More Than $ 9,000 In Hours As Fed Suggests Higher Interest Rates

[ad_1]

Bitcoin had a rough weekend as the flagship cryptocurrency suffered a dramatic price drop on Saturday, from $ 53,000 to $ 42,000, the lowest since October. The digital asset has since gained ground, however, and stood at just under $ 50,000 on Sunday morning.

This drop reflects a market-wide drop: The NFT hosting blockchain’s Ethereum (ETH) token fell from $ 4,600 to $ 3,800, while other tokens fell as much as 20% in value.

Veteran analyst and trader Ilan Tennenbaum cited the correlation between the crypto market and the U.S. stock market as a potential explanation for the drastic move: Last week U.S. Federal Reserve Chairman Jerome Powell suggested that if the As inflation continued to rise at its current rate, the Fed may have to raise interest rates in 2022, sooner than expected.

cnxps.cmd.push (function () {cnxps ({playerId: ’36af7c51-0caf-4741-9824-2c941fc6c17b’}). render (‘4c4d856e0e6f4e3d808bbc1715e132f6’);});

if (window.location.pathname.indexOf (“/ jpost-tech /”)! = – 1) {document.getElementsByClassName (“divConnatix”)[0].style.display = “none”; var script = document.createElement (‘script’); script.src = “https://static.vidazoo.com/basev/vwpt.js”; script.setAttribute (‘data-widget-id’, ‘616dd69d1b04080004ac2cc0’); document.getElementsByClassName (‘divVidazoo’)[0].appendChild (script); } else if (window.location.pathname.indexOf (“/ israel-news /”)! = -1 || window.location.pathname.indexOf (“/ omg /”)! = -1 || window.location. pathname.indexOf (“/ food-recipes /”)! = -1 || window.location.pathname.indexOf (“/ science /”)! = -1) {document.getElementsByClassName (“divConnatix”)[0].style.display = “none”; var script = document.createElement (‘script’); script.src = “https://static.vidazoo.com/basev/vwpt.js”; script.setAttribute (‘data-widget-id’, ’60fd6becf6393400049e6535′); document.getElementsByClassName (‘divVidazoo’)[0].appendChild (script); } else if (window.location.pathname.indexOf (“/ health-and-wellness /”)! = -1) {document.getElementsByClassName (“divConnatix”)[0].style.display = “none”; var script = document.createElement (‘script’); script.src = “https://player.anyclip.com/anyclip-widget/lre-widget/prod/v1/src/lre.js”; script.setAttribute (‘pubname’, ‘jpostcom’); script.setAttribute (‘widgetname’, ‘0011r00001lcD1i_12246’); document.getElementsByClassName (‘divAnyClip’)[0].appendChild (script);} else if (window.location.pathname.indexOf (“/ breaking-news /”)! = -1) {document.getElementsByClassName (“divConnatix”)[0].style.display = “none”; var script = document.createElement (‘script’); script.src = “https://player.anyclip.com/anyclip-widget/lre-widget/prod/v1/src/lre.js”; script.setAttribute (‘pubname’, ‘jpostcom’); script.setAttribute (‘widgetname’, ‘0011r00001lcD1i_12258’); document.getElementsByClassName (‘divAnyClip’)[0].appendChild (script);}

“When interest rates are low around the world and people don’t have where to put their money, they put their assets in the stock and crypto markets,” Tennenbaum said. He suggested that the crypto’s quick sell-off reflects a safeguard against the Federal Reserve’s plans to increase interest. “High rates are good for the US dollar and bad for high risk assets like stocks and cryptocurrency.”

Additionally, high levels of leverage may be partly to blame. “Whenever that leverage gets too high, the market tends to collapse very, very quickly, to liquidate that leverage. Then it can go up,” Tennenbaum said. “What we saw yesterday, is that about $ 2.5 billion has been liquidated (mostly long positions), and now the market can go up again. “

Representations of the Bitcoin virtual currency can be seen in this image (credit: REUTERS)

“The good projects will still be there for years to come,” Tennenbaum said, comparing this kind of market-wide fluctuation to the dot-com bubble of the mid-2000s. “90% of those companies are no longer with us. , but the companies that have done this are Facebook, Ebay, Google; companies like that. It’s the same in the crypto market: we’re going to see a lot of projects go, but the quality projects will be there for years to come. “

Cryptocurrency as a whole is currently on the path to recognition by the SEC, which hopes to adopt some form of decentralized currency regulation; and although this process has been arduous, the result seems positive.

“The regulation that comes in 2022 is going to be very good for the market,” Tennenbaum said. “In the short term, it can create volatility, it can explode the market; but in the long run, say five to six years from now, that’s definitely a good thing.

Igneus Terrenus, communications manager at Bybit, said the price move was a market correction.

“This is the first major correction of the year that is not triggered by a FUD or a tweet, and it shows that the market will need more time to consolidate before it can test new highs.” , Terrenus said. “Bulls and bears must be quite exhausted from a full year of roller coasters. But who buys and who sells when the market is going will leave clues as to where things will go after the holiday season.”

[ad_2]